A New Breed of Microbe Hunters

August 08, 2002

By David Shook When Thomas Monath retired as chief of virology for the U.S. Army's Medical Research Institute of Infectious Diseases, the 61-year-old doctor had no idea that his retirement might land him in the middle of some of the most crucial public health research in the United States in decades.

Monath is a former epidemiologist for the U.S. Centers for Disease Control (CDC) who, along with Dr. Ian Lipkin at Columbia University and other state and federal public health officials, quickly realized that the 1999 appearance of the West Nile virus in New York was, as Monath put it, a "bombshell." It was the first time that a strain of the sometimes deadly virus had reached the Western Hemisphere.

VIRAL INVADER. The event confirmed the suspicions of epidemiologists, who had warned for years that the spread of global commerce and tourism to the far corners of the earth would usher in a new era of epidemics, as diseases moved from the tropical zones to Western cities. "It is looking more and more like this will be a recurring epidemic," says Monath, who is now chief scientific officer at Acambis (ACAM), a leading vaccine-development company. (See BW Online, 8/9/02, "Getting a Jump on the Viral Invaders")

It's also just one of many timely projects in which Monath is now involved. Acambis has emerged as an important player in the battle against terrorism and it is flush with cash from a huge government contract to produce a smallpox vaccine.

With Monath leading the way, the company is using some of the proceeds from the smallpox project to develop at least eight other vaccines for emerging viral and bacterial diseases for which there is no cure or knockout immunization. "Acambis is at the forefront of vaccine research into all these emerging viral diseases," says Purdue University Biology Professor Richard Kuhn, a viral expert.

LOW-PROFILE. The financial payoff from these efforts is uncertain, however. Acambis has it roots in England, in the hotbed of biotech research around Cambridge University. Its headquarters remain there, even though the lion's share of research is now done in Cambridge, Mass. The company is run by leading immunologists and disease experts from major pharmaceutical companies, academic centers, and the public health sector, and they're motivated as much by the hope of ridding the world of terrible diseases as they are by the potential financial rewards. Acambis keeps a low profile and has not yet sought venture capital financing.

Acambis' shares, which are primarily traded on the London Stock Exchange and in the U.S as American depository receipts (ADRs) on Nasdaq, have nonetheless done well. The ADRs have fallen from a record high of $55 reached after Sept. 11, but still trade at about $35, about 80% higher than before the terrorist massacres.

West Nile virus is fairly typical of the diseases the company is focusing on. The virus has reoccurred in the U.S. every year since the initial outbreak in New York, spreading steadily. So far this year, it has killed five people in Louisiana and infected 53 more -- including 22 in Mississippi and 5 in Texas. In all, 34 states have found the virus in birds or its mosquito hosts. Despite the growing epidemic, however, Acambis is the only biotech outfit that has mounted a serious vaccine-development effort. Most people infected with West Nile don't become seriously ill, but those with other health problems or compromised immune systems can be at serious risk.

KILLER GOLFBALLS. Although Acambis' vaccine remains in clinical trials, it looks promising. Monath says it'll be put into human trials in early 2003. The West Nile virus, much like yellow fever, the dengue fever viruses, and Japanese encephalitis -- all close cousins -- are members of a class of golf-ball shaped microbes called 'flaviviruses,' transmitted to humans and animals through mosquitoes or ticks.

The West Nile virus has its origins in the Sudan and other countries on the Nile, but most likely drifted to North America by way of infected birds that were then bitten by mosquitoes. "I don't see any reason why it won't continue to spread westward and [south], where it hasn't been a major problem yet," says Dr. Robert Shope, professor of pathology and microbiology and an expert in tropical diseases at the University of Texas at Galveston.

At Acambis, Monath is applying a technology called ChimeriVax to develop a West Nile vaccine. ChimeriVax is a family of live, genetically engineered viruses being tested as vaccines. Acambis also is using ChimeriVax technology to develop a vaccine for dengue fever viruses, which cause often dreadful and, at times, lethal infections common in tropical parts of the world, as well as Japanese encephalitis, which infects tens of thousands of people throughout Asia each year. The technology holds hope against other blood-borne viruses spread to humans and animals through mosquitoes and ticks, such as St. Louis encephalitis, an occasional problem in the U.S. over the past several decades.

PROGNOSIS: PROFITS. A confluence of factors has led Monath's small company into a crucial role in the federal government's increased efforts to defend against potential bioterrorism. Acambis holds the CDC contract for redeveloping the smallpox vaccine, which has not been used since the disease was eradicated in the 1970s. Because many young people have never been inoculated for smallpox and many older people need booster shots to be fully protected, the U.S. is considered highly vulnerable to a smallpox terrorism attack. Following September 11, the government asked Acambis to make and deliver 209 million doses of smallpox vaccine for stockpiling, with the first 54 million by the end of this year.

Last year, Acambis had a net loss of $19.5 million on revenues of $13.6 million. Fueled by the funding from the smallpox project, however, Acambis expects to be profitable in 2002. How long the profits will keep flowing is anyone's guess, but it won't be forever. This year's profits are based almost entirely on contracts that will expire in coming years.

And despite the widespread fears about West Nile virus in the media this summer, it is not clear how much commercial demand there will be for the vaccine. If the next few summers are mild in North America, for instance, West Nile outbreaks may become less frequent. Two of Acambis' other drugs are expected to enter clinical trial by yearend. But they, like most of the diseases for which Acambis is developing vaccines, mainly affect Third World countries where few people can afford to pay for medicine.

CLOUDY PICTURE. Still, the contract work Acambis is feeding off now is no small change. The smallpox vaccine supply agreement with the CDC is worth more than $428 million, a $3 million grant from the National Institutes of Health covers the work so far on West Nile virus, and a $40 million equity investment from the healthcare technology giant Baxter International (BAX), which now owns more than 17% of Acambis' stock, have given the company a major corporate backer. Baxter and Acambis are building a $40 million vaccine production facility in Canton, Mass.

That's risky, given the uncertainties Acambis faces. "Nobody is sure how bad the outbreaks for West Nile or many of these other diseases will be," says Monath's longtime friend, Dr. Charles Calisher, a professor of microbiology at Colorado State University and an investor in Acambis. "For that reason, we're not sure yet what kind of commercial application we'll have for some of these vaccines." Nonetheless, he says, it's comforting to know that Monath and his company are moving ahead, despite the risks. Shook covers biotechnology issues for BusinessWeek Online. Follow The Biotech Beat every week, only on BusinessWeek Online